Parish's Building Purchase is Staunchly Defended

By Lisa Yates
Times Editor




Officials respond to criticism levied by taxpayers

Responding to taxpayers' pointed criticism of spending $4.9 million for the Sprint U.S. Unwired building, parish leaders staunchly defended the purchase and praised it as a good deal for taxpayers.

Taxpayers, including Charles “Sharkey” Cox, a Lake Charles businessman, questioned why parish leaders paid this amount, when the same building sold for $3.4 million just a few weeks prior.

“I don't begrudge anyone making money,” he said. “There's just not enough information about it.”

Like many taxpayers in the parish, Cox is asking some tough questions. Why does the government need a new skyscraper? Also, who stands to gain from this purchase?

Parish leaders agreed to an interview with The Times in an attempt to answer these questions, and more.

Calcasieu Parish Administrator Mark McMurry said once all of the facts are known, the public will understand why the jurors voted unanimously in favor of the purchase.

Why not buy directly from Sprint?

McMurry said one of the misconceptions people have is that the police jury did not approach Sprint directly to purchase the building directly.

“We did try to buy the building from Sprint knowing full well that the property beneath it was owned by the investors,” he said. “We made an offer that was slightly higher than the investor's.”

McMurry said Sprint wanted to sell the building, but said the company expressed concerns about a potential lawsuit from the investment group.

In a separate interview, Rick Norman, a spokesman for White Building LLC, confirmed the investment group had grounds for a lawsuit.

“We have had the Sprint building tied up with contracts and/or litigation since February, 2008,” he said.

“We have no idea when the Police Jury became interested in the building and were surprised to hear that the Police Jury approached Sprint about buying the building after Sprint had agreed to sell the building to us. Had Sprint reneged on its agreement to sell to us, it certainly would have resulted in more litigation.”

McMurry explained that this was “an unusual situation” because the Sprint building was sitting on leased property owned by the investors.

Prior to White Building LLC ownership, the property was held by two separate land owners – each with a lease/purchase agreement with Sprint.

One of these landowners held property underneath the 11-story office building, while the other owned property under the parking garage, plus an adjacent piece of land. After more than a year of negotiations, the investment group purchased these, and other, tracts of land, before attempting to purchase the building.

During negotiations, however, McMurry believed there was a short “window of opportunity” to deal directly with Sprint for the building.

An offer was made “in writing” directly to Sprint. The administration provided The Times a copy of this offer, which is dated Nov. 7, 2008.

McMurry said this information is available to the public. Also, he insisted there was no collaboration with White Building, LLC to deceive the public.

“We didn't talk to the investors until Sprint turned down our offer,” he said. “We knew that if Sprint had accepted our offer, we would still have to get the land from the investors. We were willing to do that, even though it was not preferable.”

The spokesman for White Building LLC, also denied any wrongdoing during the transaction.

“Our first knowledge of the police jury's interest in the building came after we bought the building,” he said. “Our dealings with the police jury were always at arm's length. Our decision to sell to the police jury was a difficult one weighing smaller, immediate profits against larger long-term profits that might be adversely affected by the weakening economy.”

Why pay more than the investors?

McMurry said the $4.9 million price tag paid by the parish included more than just a new building. It included the following:

* The 11-story Sprint building, plus the land underneath it;
* A multi-level parking garage, the land underneath it;
* An additional tract of land, held by one of the original owners; and,
* Four separate, but adjoining tracts of land downtown.

In all, McMurry said this transaction resulted in the acquisition of more than 101,000 square feet of downtown property near the courthouse and administration offices.

Along with ownership, the parish was given the option to lease four additional tracts of land in the area, with an option to buy once the lease runs out. Cost of the lease is $96,700 a year for the four leases.

Calcasieu Parish Police Jury President Hal McMillin said an independent appraisal came in at $5.1 million, meaning the parish paid less than the appraised value of the property.

He said this appraisal is public record and available for public inspection.

The parish also provided The Times a copy of the 150-page document, which was prepared by Jack Bass, II, licensed real estate appraiser with Integra Realty Resources of Houston.

“This is a national firm,” he said. “They are extremely familiar dealing with property this big and they were able to work within a short time frame.”

He stated firmly that no impropriety was involved in preparing the appraisal.

“I've been an elected official for the past 14 years,” McMillin said. “I would not cut a deal on the side to jeopardize the integrity of myself or the jury. We're here to be public servants; and we're trying to do the right thing for Calcasieu Parish.”

He said the property was a great value for the price paid by the parish.

“To get  more than 101,000 square feet of contiguous property downtown near the courthouse and administration offices is great deal for the parish,” McMillin said. “They're not making any more downtown property.”

He added, the value of this property is likely to increase, given plans for future downtown development.

What about the timing of this purchase?

Echoing the concerns of some local citizens, Cox questioned whether this was the right time to be spending taxpayers' money.

“The timing of this was so poor,” he said. “I don't think our tax dollars should be used this way when many people in town are being laid off from their jobs.”

Cox added his property tax bill this year was significantly higher than the previous year.

Officials said they have taken action to roll back property taxes in the parish, but they understand the worsening national economy is affecting many people in this area.

“We have sensitivity to people's problem,” McMurry said.

At the same time, he said the parish's administration must do the job it is hired to do.

“Under state law, the police jury is obligated to house parish officials,” McMurry said. “This includes the staff and offices of the sheriff, district attorney, coroner, registrar of voters, district court, family and juvenile court, the clerk of court and tax assessor.”

McMurry feared by not acting now, taxpayers would pay more in the long run.

“This opportunity could have been lost for decades,” he said.

The purchase and leasing option enabled the parish to add much needed additional parking near the courthouse and parish administration building, according to McMurry.

He said prior to the purchase, the parish was working with an architect to build an additional parking lot on a much smaller piece of property.

“The cost of that project totaled $10 million,” McMurry said. “That would have added less parking at a greater cost. Now, in addition to the parking, the parish has an 11-story building.”

Did the parish need an 11-story building?

“Buying the building gives us options,” McMillin said.

His parish administrator said the new building will enable the parish to save money on property, which it is now leasing to house staff with the District Attorney's Office.

McMurry said moving the D.A.'s staff will free some space allowing the parish to solve some overcrowding in the Family and Juvenile Court system.

“Plans were drawn for a new Family and Juvenile Court building,” he said. “Estimated cost of that project was between $12 million and $13 million.”

In addition, McMurry said $300,000 a year in revenue from tenants leasing the 11-story building offsets some of the parish's operating expenses. He said occupancy is projected to grow with additional revenue expected.

Both the parish administrator and the police jury president said they have been put on the defensive since an editorial critical of the purchase was aired on a local television station.

They said public information laws were followed – local media was notified a week in advance. Also, information was posted on the parish's Web site.

In addition, each meeting is filmed and aired on the government channel for public viewing.

McMurry said this transaction was handled properly, no differently than any other property and building acquisition.

“There is nothing in our history to lead the public to believe that anything sinister was going on,” he said.

McMillin said he has always had an “open door” policy, where constituents can call or visit with any questions they have. He said he received several calls from citizens asking about this issue.

“Some folks were unclear about the process we must go through as a governmental body and the needs we have as a parish,” he said. “Once I explained, they were overwhelmingly in support of this purchase.”

Louisiana's Financial Armageddon: A Look at Midyear Budget Cuts

By Lisa Yates



In California, Gov. Arnold Schwarzenegger warned the state faced “financial Armageddon” unless lawmakers take decisive action to shrink a budget deficit that has ballooned to nearly $40 billion for the next two years.

Gov. Bobby Jindal used less colorful language, but his message was the same – Louisiana's spending spree must come to a halt.

“Just like in families and small businesses, state government has to live within its means,” he said in a news release.

Fiscal analysts reported a $341 million revenue shortfall for the current-year state budget, with next year's budget shortfall projected at $2 billion – about $750 million more than earlier estimates.

The state's current 2008-09 budget is nearly $30 billion.

Developed by Jindal and state lawmakers, that budget boosted state spending by $1 billion. Their next budget for the 2009-2010 fiscal year that begins July 1, will have to be trimmed. If not, it will cost $2 billion more than the state has to spend next year to continue running all of the programs and keep up with the costs of inflation.

Declining revenue

Louisiana's income from personal and business taxes is expected to decline, sales taxes are flat and the severance taxes and royalties tied to oil and gas prices are shrinking as mineral prices fall.

With those economic realities, and a $360 million income tax break the Legislature recently approved for middle- and upper-income taxpayers, the state's income streams will fall below what came in last year.

Jindal did veto the legislative pay raise.

And, he recently put a partial hiring freeze in place to help cut cost – a move expected to save more than $25 this year and more next year.

He's also asked state agencies to look at reductions they could make now to help lessen costs next year.

“Everything is on the table,” he said.

Well, almost everything – except raising taxes.

No new taxes

“Raising taxes is not an option, and would be the worst thing we could do in an economic downturn,” Jindal said.

The governor has to submit his recommended budget to lawmakers before they return for a regular legislative session in April, and lawmakers will craft a final version.

This could prove to be a career-defining moment for the governor as for Gov. Buddy Roemer who faced similar financial woes. He tried to enact long-lasting reforms to restructure and clean-up state government 20 years ago, but the Legislature would not go along with it. As a result, Roemer's rising political star sputtered and died.

Former President George H. W. Bush, who once said: “Read my lips, no new taxes,” backed out of his promise in order to reduce the national deficit. With a Senate and House both controlled by Democrats – he had to negotiate and raise several taxes as part of the 1990 budget agreement.

Will Jindal be able to deliver on his promise of no new taxes?

Barry Erwin, President of the Council for a Better Louisiana, believes the governor will deliver on this promise.

“I think the governor will balance the budget without raising taxes because he has already said that was his intent,” Erwin said.

“I don't get a sense from much of the Legislature that there is a desire to raise taxes at this time. That said, I think it is going to be extremely difficult. The amount that needs to be cut is huge and I don't think it can be done without impacting services of some variety.”

Erwin said there is always some level of cutting that can be done in state government without having a major impact, but with the level of cuts the state faces – he thinks the cuts will have to be much deeper.

“Again, there are certainly some 'easy' cuts that can be made, but after that we are going to have to start assessing our true priorities and make some hard decisions about how we can preserve the most important services in higher education and health care, while recognizing that some things we might like to keep will have to be scaled back or eliminated,” he said. “All of this is very hard.”

A surplus

Jindal has some options – for example, an $865 million surplus left over from last year.

However, the money can only be used for one-time items, like debt payments and construction spending – not to fill any budget holes. Some state leaders have suggested using $285 million from the “Rainy Day” fund to help cover the deficit, but the governor said he won't tap into the fund this year.

He has left open the option for next year, however.

Trimming the budget

Higher education and health care will be the first in the state to be impacted by budget cuts, according to the Jindal administration.

But, with a push for a better educated workforce, is it wise to shrink spending at the state's colleges?

“I think the jury is still out on the impact these cuts will have to education, but when you consider that we still have great needs, especially when it comes to educating and training our workforce, the scenario is not very encouraging,” Erwin said.

“The university presidents are trying now to look at their budgets and see where they can cut while trying to minimize the impact. But it is hard to see a scenario in what we know now where students, faculty and staff at our institutions are not all affected.”

Jindal notified UL schools recently, including McNeese, that higher education will face a budget cut of more than $109 million.

The governor's proposal amounts to an average 7.82 percent decrease in spending for all UL schools. They are McNeese, Nichols, the University of Louisiana at Lafayette, the University of Louisiana at Monroe, Grambling, Louisiana Tech, Northwestern and Southeastern.

The governor has asked each to submit a plan outlining how it will implement the cuts.

In Louisiana, Medicaid spending has grown from 8.5 percent of the state general fund, two years ago, to more than 16 percent today. Medicaid spending is expected consume nearly 22 percent of available discretionary dollars by 2011 – potentially eclipsing funding for schools, economic/job development, roads and law enforcement.

The Jindal administration has already announced plans to cut Medicaid spending.

But, which Medicaid services for the disabled will be cut?

Cutbacks in other states

According to a new report from the National Association of State Budget Officers and National Governors Association, 12 states, this year, have cut back on optional Medicaid benefits such as vision and dental coverage.

The report said for many states across the nation, everything is on the chopping block.

• New Hampshire decided to suspend jury trials for a month to save money.
• Michigan has closed two prisons.Idaho announced plans to lay off 63 part-time workers.

Even some politicians are tightening their belts.

• Kentucky Gov. Steve Beshar – D, and his lieutenant governor took a 10 percent pay cut, saving the state $100,000.
• Indiana Gov. Mitch Daniels – R, refused a $13,000 pay hike.Lawmakers in Georgia and Pennsylvania recently rejected cost-of-living raises for themselves.

Erwin said everyone is waiting to see what this level of budget cuts will look like in Louisiana.

“We tend to think of budget cuts in the abstract, because usually we find a way to minimize the damage,” he said. “But we have not been in a situation like we face now in decades and in many areas, higher education in particular, it took us decades to crawl out of the hole we dug to survive at that time.”